Posts Tagged ‘gaming industry’

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Ubisoft takes a Q1 51 percent nosedive

Tuesday, July 28th, 2009

While yesterday’s report of company record setting revenues from Changyou might be a plus for the gaming industry, major French publisher Ubisoft reported a massive 51 percent drop in Q1 sales to €83 million, or approximately $114 million. This drop represents a missed financial guidance target of 12 percent. Low numbers are attributed to slow sales of Nintendo DS titles, as well as back catalogue PS3 and Xbox 360 games. Company Chief Yves Guillemot said that sales in both the U.S. and Europe have seen a “very sharp slowdown.”

ubisoft“We are currently experiencing a very sharp slowdown in our sales for Nintendo DS as well as sales of back-catalog titles, in the context of a market that is tougher than anticipated,” Guillemot said. “This will have a significant impact on our first-half showing. Against this backdrop, the solid performance of our Wii titles combined with the successful launches of Anno and Call of Juarez are points of satisfaction and demonstrate that good products are continuing to sell well.”

However, it’s not just the sharp slowdown that’s affecting Ubisoft. Guillemot also points to piracy, specifically in the DS sector, as a factor in the company’s poor showing. “Piracy is strong so we are working to put new figurines and new elements in the boxes that will change that in the future… for example in Europe we have the same market share in DS this year as last year…,” Guillemot said. “We see a different attitude toward piracy in the U.S. than Europe. We did a survey that said our consumers will be more willing to buy products than pirate them. ”

This under-performance has led Ubisoft to take on some “damage control” measures. To that end, Ubisoft has reduced its Q2 projections to €80 million ($110 million). Previous Q2 projections were set at €130 million, or $178 million. This deflation of numbers will then represent a 54 percent decrease in Ubisoft’s year-over-year revenues from 2008.

Notably, Ubisoft’s delays in getting Spinter Cell Conviction and Red Steel 2 out the door don’t bode well. Likewise, Ubisoft has also delayed the releases of Ghost Recon and I Am Alive from a projected date sometime in Q4 09 to sometime in 2010.

“We are disappointed that we have to postpone the release of several major games but we consider that this choice is the best one in the long-term interests of Ubisoft,” Guillemot added. “…The excellent response to our games at E3, as well as the high buzz generated for titles such as Assassin’s Creed 2, Splinter Cell Conviction and Avatar, reinforce our belief that the company can achieve strong growth in the second half of the fiscal year.”

With troubling numbers, release date delays, and piracy running rampant, the question begs to be asked; Is now the time that Ubisoft might want to start taking a long hard look at the free-to-play model? Historically, game development has been done at a rather rapid pace (be that a plus or minus), and piracy would literally be eliminated. Granted, Shadowbane went the F2P route, but was closed on July 1 of this year, but we’re also looking at a title that’s almost 6 years old, and lagged behind in a number of areas of today’s free-to-plays. Let’s see just how, and with what Ubisoft can pull itself out of the slump.

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Almost half mobile browser gamers purchase virtual goods

Tuesday, July 7th, 2009

itsmy.com

Yesterday, itsmy.com, one part of the itsmy network released survey findings that indicate a strong state of play in the mobile browser based gaming industry.

Polling 1,500 mobile phone users across Europe and North America, the survey asked users about their mobile social gaming habits. While only 12 percent of these users admitted to regularly spending money in their mobile gaming favorites, a healthy 48 percent of respondents indicated that they purchase virtual items from time to time for their games.

Not solely tied to numbers that purchase, the itsmy survey also concluded that the average mobile social gamer is approximately 27 years old, plays several times per day, and on average, is more likely to be female than male. While we’ve known for a while that casual gaming is often more likely to appeal to female gamers, other statistics garnered from the survey shed new light onto game appeal. Only 11 percent of those surveyed indicated that they are looking for a well known brand or title, and over 60 percent based their game purchases on the title or storyline of the game.

Before we get overly excited about these survey results, it’s important to keep in mind that this data was released as part of a promotional effort from itsmy’s parent company Gofresh GmbH. The company has a stable of 10 new games slated for debut in Q4 ’09. In addition to their mobile gaming division, the company also has two others, one focused on rich media advertising, the other on mobile TV delivery. According to their own statistics, their mobile social network, itsmy.com is the stickist in it’s field, and counts 2.5 million registered users. No references or control methods were indicated in the survey.

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Gameforge CEO Klaas Kersting to deliver “Free-to-play vs. Payment Models” keynote at GDC Europe

Tuesday, June 30th, 2009

Founded in 2003 by Klaas Kersting and Alexander Rösner, German based Gameforge quickly became the de-facto destination for European free-to-play gamers.  With award winning games, both client and browser based, including OGame, Ikariam, and Metin2, Gameforge has attracted over 75 million gamers from around the globe.

Klaas KerstingMr. Kersting is expected to share his knowledge and experience with GDC Europe attendees, and will deliver a track keynote titled, “Changes in the Games Industry – Free-to-play vs. Payment Models.”  Kersting will share his thoughts and advice on the success of the free-to-play business model.  He’ll also cover the differences between gaming attitudes and cultural backgrounds when it comes to various payment models.

“Gameforge develops pioneering and groundbreaking technologies in the browser-based game sector, which is driving the whole industry,” said Frank Sliwka, Vice President European Business Development of Think Services Game Group. “GDC Europe is focused on delivering content that appeals to a global audience, while presenting content that represents and showcases the European development community. Gameforge is one of those companies that exemplifies the European spirit of innovation, and as a market leader, we anticipate a keynote that is powerful, informative and inspiring.”

Kersting’s keynote speech should dovetail nicely into Double Fusion’s Direct of Developer Relation’s Brian Blau is expected to talk about in-game advertising.  Blau’s talk will review the design and implementation aspects of dynamic in-game advertising placements.  He’ll also be presenting examples of the Good, the Bad, and the Ugly in respect to which ads have worked, not worked so well, and outright failed.

Both Kersting’s keynote and Blau’s session will deal with the rapidly changing state of the gaming industry.  One discussing the microtransaction position, the other the in-game advertising stance.  As we’ve seen over the past year, a number of free-to-play titles are being introduced to the market in hybrid form.  Meaning, these titles are choosing wisely, and not relying on simply one form of monetization, but diversifying and offering players subscriptions for premium content, microtransaction options, and perhaps a pre or post game advertising roll.  Both of these sessions should be of high value and interest to any gaming developers looking into the future, and realizing that the state of play is no longer what it once was.

Taking place between the 17th and 19th of August at the Cologne Congress East Center in Cologne, Germany, the GDC Europe expects over 1,500 attendees from 48 countries around the globe.  The GDC Europe is regarded as the preeminent European games developer conference.

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As gaming business models evolve so do the legal practices associated with them

Tuesday, June 9th, 2009

As we all saw, E3 looks to have gotten it’s mojo back, and I can confidently say that the industry as a whole looks to be in a state of good health.  Of course, E3 is a trade show, where the industry gathers together to path each other on the back, and drool over all the new goodies in store, but combine this with the recent NPD Report indicating that nearly 2 out of every 3 Americans had played a video game in the past six months, and we’re really on to something here.

gavel1And while the focus has been mainly on games, game developers, publishers, etc., I’d like to take a step back and look at an industry that’s also reaping the rewards of a new found enthusiasm in the gaming: Legal.

A key driving factor to increased legal involvement in the gaming industry stems from the still evolving, but rapidly accelerated business model (read: microtransactions) that game makers rely on.  In the past, the path was simple, developers develop, and then hand the titles over to the publishers to push out into the market.  A great majority of developers’ legal fees when towards contracts with publishers, and that was the end of the road.  With the advent of social media, digital downloads, and increased involvement from developers themselves, comes an increased desire and need for legal council.

Patrick Sweeney, a lawyer specializing in the interactive media and entertainment firm, Nixon Peabody says, “There are more developers looking to step up to the plate with self-funded or partially funded games that they are able to monetize on better terms than the traditional model.”

Likewise, Mark Skaist, a 17 year vet of the video game industry, and partner at Stradling Yocca Carlson & Rauth comments, “Now that developers are doing things themselves, they have me working on rights clearance and other distribution related issues.”

Taking a look at Sony’s recent skyrocket, Free Realms, here we have a prime example of the increased need for experienced legal counsel.  Boasting an impressive 1 million registered users in just 17 days, it’s quite clear that Sony needed to have all their bases firmly covered before wading into the new business model waters.

Sony turned to the firm of Latham & Watkins partner Roxanne Christ to take them through these rigorous waters.  Christ and the firm are the folks responsible for establishing the rules that deal with players’ digital wallets, and end-user agreements, as well as relationships with external development studios.  “The shift to micro-transactions as a revenue model for the game raised legal issues that needed to be addressed,” says Christ.

The market, as well as the increased need for expert legal council hasn’t gone unnoticed by the legal industry.  Last year, the LA based firm Sheppard Mullin established a video game industry practice specifically tailored to address video game companies, developers, and publishers on issues of patent, entertainment, labor, and tax issues.  Amongst Mullin’s list of clients, one can find industry giants Sony Online Entertainment as well as Activision, which the firm represented in a patent infringement claim.

In 2007, the aforementioned Nixon Peabody acquired the firm of Offner & Anderson, a four attorney video game industry specialty shop.  Co-founder David Anderson says that his firms clients outgrew their exclusively corporate capabilities.  “We got to the point where we could better sever our clients at a bigger firm where were could provide them access to litigation and other practices,” Anderson says.

As the state of play continues to evolve, and more and new firms spring up, as well as the old stalwarts begin to take a look at alternative business models, my prediction is that we’ll also see an increase in legal firms that take a special interest in guiding and supporting these groups in charting relatively new waters.

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2008 survey reveals average game developer salary – $79,000

Friday, May 1st, 2009

Chances are if you’re living under a rock or in a cave, you haven’t really noticed or felt the effects of the current global economic recession.  For the rest of us out here trying to make a go at it day after day have felt and seen it, but, if you’re working in the games development industry, things may not be quite as bad as those working in, oh, I don’t know…finance perhaps?  And while the full impact of the recession is difficult to put a finger on, recent survey data released by Game Developer Magazine indicates that not only is the demand strong for game developers, but flourishing as well.

game-developer-research-logoAs noted in our previous coverage of Game Developer studies, the gaming industry as a whole seems to be doing remarkably well in these uncertain economic times.  Early last month, their study showed that game development outsourcing (to firms such as ours) is on the rise, and last Halloween we covered their release of a 13% increase in North American gaming jobs over the course of 2007.  This recent news from Game Developer doesn’t disappoint, as they found in their 8th annual Game Developer Salary Survey that the average American game industry salary in 2008 landed just $1,000 short of $80,000/year.  This figure reflects a 7% increase from 2007’s figure of roughly $74,000.

However, this information must be taken with a grain of salt, as the recession is notably reducing the number of available positions.  Given this quandary, as less jobs become available, more experienced game developers find themselves in a position to ask for higher salaries.  Selected highlights from the industries only major publically released analysis of salaries in the video game industry:

  • Programming: programmers are the highest paid talent next to high-end businesspeople, with an average annual salary of $85,024. Experience pays in this role, as those with greater than six years of experience earned 26% more than the average annual salary.
  • Art & Animation: artists – averaging a $69,532 salary, nonetheless, 28% of art directors reported lower salaries than the previous year. But these more experienced, higher status artists also tend to earn at least 35% more than those with less experience and lower title.
  • Game Design: Averaging $67,379, design positions sprouted an average $3,730 over last year. As with many roles, region makes a difference, given that West Coast designers make on average $8,283 or 12% more than the rest of the game designers in the country.
  • Production: of all the game development disciplines, production – with a salary average overall of $82,905 – is the most welcoming to women, with 21% of the workforce made up of females – more than twice the industry average. The discipline as a whole saw a strong $4,189 bump from last year.
  • Quality Assurance: testers with less than three years experience make up the largest percentage of this segment – 46%. Quality assurance is the lowest paid of the game development disciplines, averaging $39,571 – almost flat to 2007 – and the majority of Q/A people – 87% – are lesser experienced. The number of female Q/A testers jumped from 6% in 2007 to 14% in 2008.
  • Audio: sound designers as a group earned 6% more than they did in 2007, up $4,758 on average over last year to $78,167. 74% of audio developers reported that their salaries increased over 2007. Interestingly, 48% of those in the game audio industry have been working there for 6 years or more – more than the 40% for game design, and equal to the 48% for production.
  • Business & Marketing: the business field as a whole remains the highest compensated group in game development – with an average salary of $102,143 – and also receives the highest amount of additional compensation. However, salaries vary significantly between individual job titles in this section, with experienced VPs and executive managers making the most of any individual section in the entire survey – at $131,085 on average and reporting at least 6 years experience.

The full report is available from Game Developer Research and covers mush more details US regional and growth data, including year over year results from 2004 – 2008.  The full report also spotlights data accrued from Canada and Europe.

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Gaming for good: Tandem Games uses microtransaction technology to donate to charity

Tuesday, April 7th, 2009

While microtransaction technology is nothing new to the non-profit world, this is however the first report that we’ve heard of regarding a gaming company using this technology to raise funds for charity.  Austin, TX based Tandem Games announced yesterday that they’ve introduced a new feature to their popular free-to-play MMORPG Domain of Heroes.  This new integrated feature allows users to donate 5% of their in-game purchases to a charity of their choice.

Currently, Domain of Heroes has partnered with Child’s Play and Women In Games International with a host of additional charities on their way.  Child’s Play is a non-profit organization that donates toys, games, and books to sick children spending time in the hospital.  Women in Games International is dedicated to the inclusion and advancement of women in the gaming industry.  Both very worthy, and great launching points for this type of action, as both non-profits have a particular focus on gaming.  Domain of Heroes is supported through microtransaction via purchasing of ‘wishes’.  Wishes are the games’ form of currency, used for both vanity upgrades (a custom name for example) and in-game usage (a mule, for example allows users to carry more loot).  It’s these in-game purchases that now allow for 5% of the purchase to be donated to the non-profit organization.  Domain of Heroes users have already raised over $500 via in-game item purchase donations since the feature was introduced.

“It’s a great way for players to have a direct influence on where their donation dollars go, while raising awareness for game-related charities in general,” said Aaron Murray, Technical Director and Founder of Tandem Games.“Both Child’s Play and WIGI are very excited to see this level of ongoing commitment from a company. We hope other companies will follow suit and share their revenue with deserving charities.”

Domain of Heroes, which launched back in November of 2008 is a browser based, text based MMORPG that has seen over 28 million PVE actions and 160,000 PVP battles.  Given the games’ ‘play anywhere’ factor, Tandem Games makes Domain of Heroes available to, literally, anyone with an internet connection, fully compatible in IE, Firefox, Opera, and Safari.  And this isn’t just a barren wasteland, as over Domain of Heroes now counts over 18,000 players worldwide, so there are always others to play with, should you so choose.

Overall, this is a great move by Tandem Games.  Not only are they generating some great press and buzz about the company and Domain of Heroes, but they’re doing for the best of reasons: a good cause.  If this type of donation is successful, I wouldn’t be surprised to see more and more microtransaction based titles doing this as a special holiday promo (I’d gladly fork over $5 during the holidays to a charity of my choosing), or as an ongoing option.  No word on how long Domain of Heroes users will have this option, but for the foreseeable future, it’s here to stay.  Hats off to Tandem Games.

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It’s GDC Week!

Monday, March 23rd, 2009

Billed as ‘the’ game industry event of the year, the GDC kicks off later today in San Francisco.  Technically, the conference runs Wednesday through Friday, but a number of events are taking place on Monday and Tuesday that are sure to ignite imaginations and build solid connections.  According to Meggan Scavio, GDC Director, conference attendance is expected to be a bit off from last years’ whopping 18,000 attendants.  And while NPD reports that the gaming industry is still chugging along amidst an economic recession, lowered attendance is a clear indication of the uncertain financial outlook.

gdc-09-event-imageTwo standout highlights from this year include Wednesday mornings keynote speech by Satoru Iwata, chief executive of Nintendo.  This will be his third talk at the GDC, but his first since Nintendo’s Wii revolutionized what it means to be a ‘gamer’ and who’s included in the group.  Iwata is expected to speak about the DSi, the newest version of the popular hand held gaming platform originally launched in 2004.
Thursday morning brings industry legend Hideo Kojima, or Metal Gear fame, to the forefront; a ‘must see’ for any and all developers, designers, oh heck, if you’ve ever played a game – don’t miss this guy!

Games conferences are certainly about learning what’s hot, who’s got what technology coming out when, and making vital contacts, but let’s not forget about the events after the sun goes down.  This year, it looks like the Sony party is the hot ticket.  They’ll be kickin’ it hard on Wednesday night with their grand soiree.  In start contrast, with perhaps visions of AIG, Microsoft and Nintendo are slated to have a strong presence, but will be hosting lower-key events.

Also noteworthy is Apple’s presence, or lack there of, at the GDC.  Currently, there are approximately 6800 games available for the iPhone and iPod Touch.  These devices have been hailed as the fastest growing platform(s) in the industry.  Apple is there, but they’ve yet to announce any big undertakings.  A slight ‘huh?’ comes to mind, as again, this is the biggest industry event of the year.  If Apple were ready to blow the doors off something big, this would certainly be the showcase to do it at.

View the full schedule of GDC events here.

Naturally the fatfoogoo team will be at the event in full force.  Give us a shout, and let’s talk microtransactions!

  • Martin Herdina – CEO – martin (at) fatfoogoo (dot) com
  • Clive Jefferies – SVP Global Sales – clive (at) fatfoogoo (dot) com
  • Stevie Case – VP Sales & Business Development – Stevie (at) fatfoogoo (dot) com
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IGA Worldwide: We need more funding, or a buyer

Monday, March 16th, 2009

It looks like Tim Chang’s predictions on what’s hot and what’s not in the gaming industry are already proving to be right on the money.  Or lack there of in this case.

iga_worldwide_logoLate last week, Dean Takahashi reported on a response the VentureBeat team received from IGA Worldwide chairman Justin Townsend, confirming that the Gordian Group has been hired to keep the company afloat, either via a new injection of capital, or a possible sale.  Townsend says that the company’s preference would be to finish closing a third round of funding, but that IGA Worldwide also has a financial responsibility to it’s shareholders to consider selling the firm.

The Gordian Group has set a deadline of March 27th for interested parties to submit their bids, and Townsend remains adamant that no “low ball” offers will be accepted.

IGA Worldwide and Townsend find themselves in a rather sticky situation.  While the gaming industry has been one of the few areas to remain (relatively) untouched by the global financial crisis, IGA Worldwide specializes in advertising, an area that has taken quite a beating since September.  Townsend admits that times are tough, and that IGA Worldwide laid off 25 percent of their staff in November, staffing the firm with approximately 45 employees.

While the privately held company does not release it’s financial data, according to a VentureBeat source, IGA Worldwide lost close to $11 million on revenues of $3 million in 2007.  IGA Worldwide then projected to lose $26 million on revenues of $3.4 million in 2008.  Townsend was quick to comment that the firm did not, in fact, lose all of that projected cash, as is renegotiated deals with game publishers and platforms.  Townsend also admits that IGA Worldwide had previously guaranteed payments to publishers in exchange for the rights to insert ads into their games.  These agreements simply no longer made sense after the economic collapse made revenue projections unrealistic, says Townsend.

“We had to sit at the table and come up with a new business model that worked for all parties,” Townsend said.

Since being founded in 2004, and launching their first series of ads in 2006, IGA Worldwide has worked with top brands including IBM and McDonalds.  They have raised more that $46 million in two rounds of funding from investors including Morgenthaler Ventures, Itochu Technologies, Translink Capital, Sumitomo/Presidio STX, Easton Capital, DN Capital, Intel Capital, GE/NBCU’s Peacock Equity fund, and KTB Ventures.

Now this is an interesting story to watch.  IGA Worldwide, one of the biggest players on the in-game advertising circuit, is on the rocks.  Will they in fact land more capital and continue forging on through rough waters?  Or, will Microsoft’s Massive, recent news makers Double Fusion, or the big G (Google) step in and snatch IGA Worldwide up and include it in their growing Adsense for Games project?

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Korean Government serious about Games -$200m serious

Tuesday, December 9th, 2008

Gaming is no joke in Korea.  Not only is Starcraft played competitively, but cybercafe’s run around the clock.  To this end the Korean government is taking serious steps in making sure that Korean game developers stay on the map.

The Korean government recently announced that they’re pumping 350B Korean Won (approx. $200M) into a fund that’s designed to be used by the video games industry.  This fund should ensure that Korean developers not only stay competitive, but should also fund innovation.

Yu In-chon, Korean minister of Culture, Sports and Tourism made the announcement noting that the current growth rate must be maintained if the country is to reach it’s goal of becoming the world’s 3rd largest video gaming market, only behind the US and Japan.  In-chon noted that in addition to the cash influx, the government has an additional 59 projects to ensure these goals are met.  The proposal seeks to fund the gaming industry through 2012 with the end goal of exporting a massive 5 trillion won ($3.3 billion)

In a rough and tumble economic climate, obviously this is a noted departure from the norm, and a refreshing vote of confidence from a national government.  NCSoft, one of the world’s largest developers of MMO’s is headquartered in Korea, and could be on the beneficial end of this deal.

What strikes me as slightly odd is that it took the Korean government this long to actually notice the video games industry?  When Starcraft tournaments are broadcast on live television, and specific video gamer training camps are established, this is clearly no longer under the radar.

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Mobile Games Market value expected to double by 2013

Thursday, November 20th, 2008

A recent report published by Juniper Research predicts that the mobile gaming market is expected to reach revenues of more than $10BN by 2013.  One of the key factors driving the prediction?   Apple’s iPhone.  The iPhone has single handedly driven mobile gaming publishers and developers into frenzy to get their games to market ASAP.  The consequence?  Paid-for mobile game downloads have more or less flatlined across North American and Western Europe.

At the same time, it’s not all roses for mobile gaming developers.  The potential for growth is being damped by a combination of limited on-portal revenue shares for publishers and poor games marketing.  The resulting outcome is a mass exodus from the mobile gaming industry.

Dr. Windsor Holden comments, “The revenue share offered by Apple to games publishers is incredibly attractive. The danger is that if operators do not respond with a similar business model, publishers faced with low margins may simply exit Java completely, thereby reducing consumer choice in the longer term.”

A suggestion?  What about a monetization toolkit for mobile games developers that could dramatically shorten their time to market AND help fund continued development?

Juniper’s report also found that ad-funded downloadable content has increased in popularity, BUT the revenue generated from this advertising is most likely insufficient to provide developers or operators with a primary revenue stream (read: why bother?).  Given the current state of financial affairs, CPM rates are falling through the floor, thereby making ad-supported games less and less attractive to developers.  Again, see suggestion above.

But fear not mobile game developer, for all is not lost.  Juniper does see room for growth and profitability in the Indian Sub Continent, Africa/Middle East and South America.  Increased mobile use and low levels of console gaming systems combined with fixed (landline?) Internet have been a driving factor in making mobile phones the gaming platform of choice.

Other significant findings in the Juniper report include:

  • China and the Far East will remain the largest regional market for mobile games throughout the period covered by the report.
  • Global revenues from in-game advertising will rise significantly from 2008 to 2013.
  • Operators need to reduce data charges further for out of bundle customers to encourage casual mobile Internet usage and thereby stimulate the mobile entertainment market

Further details and the study are freely available at Juniper Research.

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